In order for this family to continue in the occupation of farming it has to be physically, mentally AND financially fulfilling. Two out of three won’t cut it.
This is the final installment of my series of agronomics posts. I think I had another topic or two in mind but, with the season coming on strong now, I probably won’t have time. In any case, this might be the most important one.
It’s been our goal from the outset to figure out how to be financially viable in this profession and, so far, we have discovered plenty of practices that do NOT lend themselves to a profitable future, which I wrote about in Eliminating the Duds. We have also found at least one activity that does seem to make some money, the plant starts business. Finally, there are a number of crops that will hopefully pay their way, if we grow them on a larger scale, properly. These are the greenhouse crops like tomatoes, peppers, cucumbers and early season peas and beans. Also grown in the greenhouse but not for food (or not just for food) are a variety of crops grown for their seed.
I’ve read a lot of small-farming books that were helpful in figuring out how to grow food but, more often than not, they were silent on how to make money. Eliot Coleman’s books were somewhat helpful in terms of marketing advice but, in hindsight, were lacking in the bean counting. In other books and publications you tend to find references to expected dollars per square foot for a given crop but even those sometimes don’t discuss how much the crop consumes in water and nutrient or even costs such as harvesting, cleaning and storage. And, frankly, there must be huge variation between locations on costs and pricing, rendering such advice almost worthless. But even on a mountainous island that has relatively little agricultural land, dollars per square foot seems like an unimportant metric in determining financial success. There’s lots of hayfield in sight on a typical drive across the island yet there remain only 24 hours in my day.
The one book I’ve read that neatly wraps up most financial factors is Richard Wiswall’s The Organic Farmer’s Business Handbook – A Complete Guide to Managing Finances, Crops, and Staff—and Making a Profit which, regrettably, I can’t seem to find at the moment. With the copious – almost gratuitous – use of Excel spreadsheets, Wiswall makes no assumptions about what is a good crop or a bad crop. He painstakingly measures all factors – fertilizers, labour (using a standard minimum wage for Vermont), equipment depreciation, marketing effort etc – converts them to dollars per acre and then determines which crops make the most money. His spreadsheet requires an entry for wages (which are low compared to here) and it is this metric that I think other books leave out or deal with intuitively (a publication by the Canadian Organic Growers starts by suggesting you name the salary you want to end up with and works backwards from there. I picture Dr. Evil starting with one meeelion dollars…upturned pinky finger falling from incisor as the reality of picking salad greens for 200 hours per day sets in). In Wiswall’s book, the crops that pay all the expenses and make the most money are the winners.
Of course, in most books, farmers state that they still grow crops they know to be marginal just so that their customers can enjoy a one-stop-shopping experience. I’m not a fan of this idea. It’s probably a good plan if your only outlet is a farm stand but I know that plenty of customers at the public markets like to spread their money around, getting their salsa ingredients from 4 or 5 different farmers. Plus, a significant proportion of our sales were to chefs i.e. buyers of one or two products at a time, in bulk. I don’t think there’s much sense in trying to grow everything, if many of those crops lead to losses. It’s like the joke I first heard from my Uncle John who worked for Canadian Pacific Airlines, after it gobbled up Wardair. “We lose money on every passenger…but we make it up in volume”. Unfortunately, PWA and then Air Canada didn’t get the joke and, if their shareholders and bondholders are lucky, neither will the next white knight or “strong, stable, national Conservative majority government” that bails them out.
Forgive me, for I have digressed.
The great overriding caveat to using Wiswall’s system (or any other, really) is its complete dependence on detailed record-keeping, something I haven’t been so good at in the past. It also presumes standard sized beds and a fairly large scale in which you use some 4-wheeled tractors to rototill or spread soil amendments on up to an acre at a time. The idea, though, could probably be scaled down to smaller farms using smaller equipment, but with larger margin of measurement error.
My only modification to Wiswall’s methodology is that, because our operation is just the two of us, I like to calculate profitability in terms of an hourly wage. I often do this in my head while I’m working on that crop. So far, it’s been great at eliminating crops like potatoes from our product list. The way we were growing potatoes – the high seed cost, the low yields, the amount of water, the proportion of poor quality product, the washing, the low prices – meant that we were probably working for less than minimum wage. And if my back of the envelope calculation fails, then the economics definitely don’t work since there are a whole raft of forgotten, amortized or proportional expenses that ought to be factored in.
A rule of thumb for me is that a good crop yields $60 or more dollars/hour in the harvesting/cleaning/packing stage. I think we achieved this for salad greens, peas, cucumbers and tomatoes. Factoring in some of the other costs, like capital depreciation of a high tunnel, would really start to diminish this rate but are somewhat hard to pro-rate fairly. But it’s probably a reasonable starting point for future evaluation.
Even if all other expenses reduce the rate by half, it’s probably still a good crop to grow provided that there’s enough produce to harvest. My thought over the winter was that, between June and September, I should probably be spending 4 hours per day just harvesting. I think I was lucky if I spent a quarter of that time last year.
The questions I have are whether the crops will grow well enough to require that much harvesting and, if so, whether I actually have 4 hours per day – on average – to harvest.
Oh, and whether I can sell that much produce…